Canadian institutions are increasing their exposure to crypto assets

As mainstream investors and financial services firms embrace crypto assets, retail investors say they feel more comfortable putting their own money in the space

TORONTO, April 6, 2022 /CNW/ — While 2021 was the year of institutional adoption of crypto assets, 2022 is shaping up to be the year of mainstream crypto adoption by financial services firms and their retail investors, says a KPMG trio in Canada the partners.

Crypto assets have emerged as an alternative investable asset class among institutional investors, with many gaining exposure through regulated investment products such as exchange-traded funds. Financial services firms are also integrating crypto-asset-related services alongside their existing businesses by issuing ETFs, offering advice on wealth management, custody, fund administration, compliance, clearing and bookkeeping. Marlet.

“Retail investor interest in crypto assets began with early adopters years ago, and since then we have seen a steady wave of institutional interest in the space – from pension funds and insurers to hedge funds and family offices – with nearly a third telling us they have direct or indirect exposure to the asset class,” Karim SadekPartner and Leader Crypto Assets and Blockchain at KPMG in Canada said, referring to a survey conducted by KPMG in Canada and the Canadian Association for Alternative Strategies and Assets (CAASA) last fall.

“While institutional investors have told us they are interested in the crypto space because they see it as an innovative technology game with great potential, financial services companies are also interested in crypto assets, but they are a little more cautious due to the lack of regulatory clarity in Canada. Yet even with this regulatory uncertainty, nearly four out of 10 financial services companies we’ve heard of offer crypto asset services, so we believe this will be a pivotal year for financial institution adoption of crypto. . »

Highlights – Survey of Canadian Institutional Investors and Financial Services Firms:

  • 32 percent of institutional investor respondents have direct or indirect exposure to crypto assets
    • 50 percent have exposure through exchange-traded funds, closed-end trusts or other regulated products
    • 36 percent have exposure to crypto-related public stocks
    • 29 percent directly own crypto assets
    • 29 percent invest as a limited partner in a venture capital or hedge fund
  • 39 percent of financial services respondents offer crypto-asset services
    • 42 percent offer wealth management or financial advice in the space
    • 33 percent provide custodial, clearing or settlement services
    • 22 percent issue ETFs or regulated products
    • 11 percent provide liquidity for regulated products as a market maker

Among the institutional investor respondents, 57 percent said they invested in crypto assets between 2020 and 2021, but most investments were relatively small, with 71 percent allocate less than two percent of their portfolio to the asset class.

“Institutional investors are increasingly adding exposure to crypto assets to further diversify their portfolios given the reduced ability of government bonds to act as portfolio buffers,” says Chris Farkas, Partner, National Advisory Services Leader financial services for asset management, KPMG in Canada. “While this is a newer and potentially promising space for institutional investors, they are clearly taking a cautious approach.”

2022 will see more financial services organizations offering crypto asset services, according to Geoff Rush, partner and national leader in the financial services industry. “Nearly seven in 10 financial services companies told us they were considering offering crypto asset services, and 6 in 10 told us they were moving from analyzing opportunities and developing investment strategies. crypto assets to building crypto asset products and services and onboarding customers, so this is a notable shift,” he added.

Retail investors interested in crypto

An additional survey conducted by KPMG in Canada shows growing retail investor interest in crypto assets, but most are waiting to see what institutional investors plan to do in the space before adding them to their portfolios.

KPMG survey of over 1,000 Canadians reveals 13 percent of respondents bought Bitcoin or Ethereum directly, while 11 percent bought bitcoin exchange-traded funds or other crypto asset funds. One out of five who had not yet invested expressed interest in making direct and/or indirect investments.

Almost a quarter (23%) said their comfort in investing in the space will increase as more institutional investors adopt crypto assets and more than half (54%) say they intend to let institutional investors “test the waters” before taking the plunge.

Canadians under 35 and men of all ages were more likely to have invested in crypto assets and want exposure to this asset class.

Survey Highlights – Survey of Canadians:

  • 13 percent of respondents have directly purchased crypto-assets such as Bitcoin or Ethereum (17 percent men against 8 percent women)
  • 11 percent bought Bitcoin ETFs or other crypto asset funds (14 percent men against 8 percent women)

Age

Respondents who bought crypto assets
like Bitcoin or Ethereum directly

Respondents who bought Bitcoin
ETFs or other crypto asset funds

18-24

24 percent

20 percent

25-34

23 percent

15 percent

35-44

19 percent

14 percent

45-54

10 percent

12 percent

55-64

5 percent

6 percent

  • 21 percent of respondents who had not yet invested are interested in directly buying crypto assets like Bitcoin or Ethereum (25% men vs. 17 percent women)
  • 21 percent were interested in buying Bitcoin ETFs or other crypto funds (25 percent men against 18 percent women)

Age

Interested in buying crypto assets like
Bitcoin or Ethereum directly

Interested in buying Bitcoin ETF or
other crypto asset funds

18-24

31 percent

37 percent

25-34

33 percent

31 percent

35-44

22 percent

24 percent

45-54

21 percent

21 percent

55-64

10 percent

15 percent

“It is interesting but not unexpected to see that 18 to 34 year olds are more inclined to buy crypto assets given the generally higher risk appetite and longer investment horizons of younger investors. financial services companies looking to build or add to their crypto asset services, this is a key demographic they should pay close attention to,” says Geoff Rush.

To learn more about the institutional adoption of crypto assets in Canadacheck out The Rise of Crypto-Asset Adoption in Canada

KPMG in Canada surveyed 1,009 Canadians between February 14-16, 2022 on Schlesinger Group’s Asking Canadians panel via the Methodify online research platform.

KPMG and the Canadian Association of Alternative Strategies and Assets (CAASA) also surveyed institutional investors and financial services operating in Canada. The survey was administered to ACASA members and KPMG clients and received 75 responses between August 30 to October 31, 2021.

ABOUT KPMG FR CANADA

KPMG LLP, a limited liability partnership, is a Canadian-owned and operated full-service audit, tax and advisory firm. For more than 150 years, our professionals have provided consulting, accounting, auditing and tax services to Canadians, inspiring trust, fostering change and driving innovation. Guided by our core values ​​of Integrity, Excellence, Courage, Together, For the Better, KPMG employs more than 10,000 people in more than 40 locations across Canada, serving private and public sector clients. KPMG is consistently ranked among Canada’s top employers and one of the best places to work in the country.

The firm is established under the laws of Ontario and is a member of KPMG’s worldwide organization of independent firms affiliated with KPMG International, a private English company limited by guarantee. Each KPMG firm is a legally distinct and separate entity and describes itself as such. For more information, see home.kpmg/ca

SOURCE KPMG srl

For further information: For media inquiries: Roula Meditskos, National Communications and Media Relations, KPMG in Canada, (416) 549-7982, [email protected]

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